When folks think of storage software, the first names that come to mind are likely to be VERITAS, HP, IBM, or even EMC. But Microsoft? Well, it's true. The Redmond, Wash.-based software giant has been gaining momentum in a niche of the storage software market known as NAS, or network-attached storage.

NAS is hard disk storage that is set up with its own network address rather than being attached to the department computer that is serving applications to a network's workstation users. By moving storage, which more often than not takes up a great deal of space, off of the department server and onto the local area network, applications and files can be piped from one location to the next because they are not competing for the same resources.

Microsoft specializes in delivering NAS to the low-end markets, and according to the latest figures from research firm IDC, the market share for Windows in NAS devices rose 8 percent in the first quarter to 41 percent. Not too shabby for a market that reaped $1.49 billion last year.

IDC analysts attributed the growth partly to Microsoft's warm partnership with Dell, which is enjoying its own success as it seeks to pry its way into
the enterprise a bit more. On other partnership fronts, the company forged a deal with EMC in which the storage giant agreed to bundle Windows into a lower-end NAS product.

Charles Stevens, corporate vice president of Microsoft's Enterprise Storage Division (EDS) and right-hand man to division leader Bob Muglia, is responsible for sales, marketing, and product management. Previously, Stevens was vice president for the Enterprise and Partner Group, where he was responsible for Microsoft's enterprise sales and partner strategy worldwide.

He led a sales force of 6,000 people worldwide, and developed a new enterprise solution selling model, with a focus on servers and solutions. Stevens recently spoke to internetnews.com and discussed Microsoft's Enterprise Storage Division as well as overall trends in the storage market.

Q: What does this Enterprise Storage Division do? What is its purpose? What are its goals?

With the creation of ESD about eighteen months ago, Microsoft clearly signaled its commitment to the storage market. Currently, several hundred people work in the division, and we continue to grow. ESD's three primary goals are:

To make Windows the best possible platform for storage

Catalyze the industry to innovate storage technology for the benefit of customers

To introduce new Microsoft storage products

We have made good progress on all three fronts. With Windows Server 2003, Microsoft introduces a number of innovations to reduce the costs and complexities of storage management for customers, making it easier and more reliable to manage and maintain disks and volumes, backup and restore data,
and connect to Storage Area Networks (SANs). Partnerships with over 30 partners including Dell, EMC, HP, IBM, and many others exemplify our commitment to be a leader in the storage industry. The partnerships will deliver more scalable, better-integrated network storage solutions to customers for easier storage management and improved price performance.

Customers will see a joint value proposition from our partnerships that will improve the economics of today's deployments of industry standard platforms, while creating new opportunities to address more challenging requirements. New storage elements of Windows Server 2003 also help us catalyze the industry, by providing APIs that enable ISVs and IHVs to optimize their products for Windows.

ESD's current product is Windows Powered Network Attached Storage (WPNAS). It has been in the market for over two years and is getting great traction as evidenced from our increased market share numbers. We are providing our customers with a great product with advanced features at very competitive prices. Version 3.0 of WPNAS will be released in the next 90 days. ESD is currently planning the development of additional products.

Q: How does the Enterprise Storage Division fit into Microsoft as a whole? The server group owns .NET (Windows 2003), which offers a number of new features focused on making it easier to use MFST platforms in a networked storage environment. How does the ES Division work with the groups that own this software?

The Enterprise Storage Division is a business division with the Server Group at Microsoft. We are very tightly linked with the Windows Server team and
played a leading role in the development of new storage aspects of Windows Server 2003, such as Virtual Shadow Copy Service (VSS) and Virtual Disk Service (VDS), Multi-Path I/O (MPIO) and iSCSI. We are connected and integrated with other groups, too. Cross-division integration is very important, and receives a lot of focus, at Microsoft.

Q: Analysts have said that Microsoft has done little in the way of fleshing out its strategy for ESD since announcing its intentions to enter the market. What is MSFT's strategy for becoming a major player in the storage market?

Microsoft has offered storage products for some time, such as the NT File System (NTFS) and the Distributed File System (DFS), as well as offering NAS capabilities with Windows Powered NAS. We have a clear track record in the market. Yes, there are many players in the storage industry, but the market opportunity is still tremendous. Customers are still looking for improved solutions to manage the explosion of data in the enterprise. What we are doing is extending the efforts we have already made and addressing the new problems we see. We think we have an opportunity to be of real value in the market. Market acceptance of our products and partner support is our goal.

Q: Outside of NAS, which has been a big success for the company, what areas will Microsoft be focusing on? Software management? Storage resource management? File systems? Where does Microsoft see the real growth potential?

Our division is actively focused on helping solve multiple challenges customers face in ensuring the availability of reliable data and generally lowering the costs and complexities of storage. That means we're focused on the full range of storage solutions, from a software perspective, including file systems, NAS, SAN, backup, continuous availability, near-line storage, and storage resource management In terms of growth, we expect to see continued growth in NAS. We also foresee real growth in the adoption of storage solutions by small to medium size companies. IP SANs supported by technologies like iSCSI will be a driving force behind that growth. We certainly see great growth potential in the international markets.

Q: Will you develop this software internally, or will you still be working with partners like VERITAS in the future? How is your relationship
with VERITAS?

ESD will develop new software products and we will continue to work with a partner ecosystem. Much of what we are doing is providing an infrastructure
for storage management. With that infrastructure in place, our partners can then build the value-add products on top of what we are providing. We think
this presents a tremendous opportunity for our current partners and potential new partners moving forward. Particularly as storage management features of Windows Server 2003 are adopted, partners will be able to innovate more advanced capabilities. Already we have many of the major hardware and software vendors working with us in support of Windows Server 2003 APIs such as Virtual Shadow Copy Service (VSS) and Virtual Disk Service (VDS), as well as Multi-Path I/O and iSCSI. VERITAS is a good partner and has announced support of Windows Server 2003 with its introduction of Backup Exec 9.0.

Q: Standards play an important role in the management of storage-oriented software. One of these, the Storage Management Initiative Specification (SMI-S), formerly known as Bluefin, is an open protocol that makes it possible for disparate storage devices to work together on a storage area network (SAN). What is Microsoft doing with regard to this spec? How does iSCSI fit into Microsoft's storage strategy? Discuss the importance of this within Windows Server 2003. Some storage pundits have positioned iSCSI as a potential threat to the existence of Fibre Channel. Does Microsoft see the two in this light, or are they complementary and why?

We are exploring and evaluating Bluefin at this time, but Microsoft is enthusiastic about iSCSI. We are playing an important role in bringing the storage vendor community together to make iSCSI-based applications and storage devices a reality for customers. iSCSI will provide a lower-cost option for customers that require high levels of performance and reliability for their planned storage area network (SAN) implementations.

Microsoft delivered Internet SCSI (iSCSI) support for Windows client and server environments in June. Microsoft's iSCSI software driver will continue to be provided via Web download at no charge for Microsoft Windows 2000 client and server versions, Windows XP client, and the Windows Server 2003 family of products. More than 60 independent software vendors (ISVs) and independent hardware vendors (IHVs) are in the planning stages or are developing Windows-based applications and storage hardware products for iSCSI. And Microsoft has created an iSCSI Designed for Windows Logo Program to enable IHVs to qualify their Windows-targeted iSCSI hardware components.

We do not view iSCSI as a replacement for Fibre Channel. iSCSI complements existing storage solutions — for example, if an enterprise has two or more separate Fibre Channel SANs in operation, iSCSI is the perfect low cost solution to connect these storage islands. If an enterprise has not yet invested in Fibre Channel, iSCSI allows it to implement a new cost-effective storage solution that runs over their existing Ethernet infrastructure.

By being able to leverage the existing TCP/IP and Ethernet networks, the cost of entry into the world of SANs is considerably lower. iSCSI allows smaller and medium-sized companies that can't handle the large capital outlay associated with Fibre Channel to be able to deploy a SAN of their own — something that was beyond their reach until now.

Q: What challenges and key trends does Microsoft see going forward in the storage software market that will shape its strategy?

For our division, the biggest challenge is building out our organization quickly but intelligently. We need to grow rapidly in order to meet the great opportunities in front of us, but we want to exercise discipline and strategy as we do so. Finding smart, creative, and dedicated people is a top priority for us. From a market trends perspective, the development and adoption of standards will be a key element of our strategy. And we look forward to working closely with customers and partners as we execute on our mission.

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